Photo: Bloomberg

Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, announced yesterday that it would expand collaboration with Japan’s loss-making Renesas Electronics Corp, in a bid to boost both companies’ microchip manufacturing technology and business.

TSMC and Renesas, the world’s biggest supplier of microcontroller chips for automobiles, yesterday signed an agreement to manufacture MCUs for Renesas, using 40 nanometer embedded flash (eFlash) process technology, according to a joint press release.

Renesas previously agreed that it would outsource MCUs to TSMC using 90 nanometer eFlash process technology.

Under the agreement, TSMC will advance Renesas’ MONOS (Metal-Oxide-Nitride-Oxide-Silicon) technology to 40 nanometer process to make MCUs that are used in next-generation automotive and consumer applications such as home appliances, a public relations official at TSMC said by telephone.

However, he declined to comment on whether Renesas would outsource more MCUs to TSMC.

“Renesas is one of the leaders in the MCU market and the collaboration will help deliver the performance Renesas needs for new production introduction with the level of quality and reliability its customers have come to expect,” Jason Chen (陳俊聖), TSMC’s senior vice president of worldwide sales and marketing, said in the press release.

Renesas had been under constant pressure to invest heavily in waging a technological war against emerging overseas rivals to produce smaller and more powerful chips at lower prices, according to recent media reports. The company lost ￥62.6 billion (US$785 million) in the year to March.

At 40 nanometer process, MCU products could achieve higher speed, lower power consumption and more than 50 percent smaller die size compared with the current 90 nanometer node, according to the news release. Furthermore, by making the MONOS process platform available to other semiconductor suppliers around the world (including fabless companies and IDMs), Renesas and TSMC aim to set up an ecosystem and further widen the customer base, the two companies said.

Renesas senior vice president Shinichi Iwamoto said the move to its rival would see more efficient and flexible production, making it easier to match fast-changing customer demand. However, he did not comment on reports the company would cut about 14,000 jobs, or 30 percent, of its workforce as part of a major restructuring.

“We acknowledge the need for job cuts, though nothing has been decided,” he told reporters in Tokyo yesterday.

He also declined to comment on an earlier story in the Nikkei Shimbun that said it planned to raise ￥100 billion, mainly from its top shareholders, NEC Corp, Hitachi Ltd and Mitsubishi Electric Corp.

Renesas may sell some of its 19 production plants in Japan, including one in Tsuruoka, Yamagata Prefecture, the Yomiuri Shimbun reported on Sunday after saying last week the company plans an alliance with TSMC.

Lin Cheng-ming (林振銘), a director in charge of specialty technology at TSMC, who also met reporters yesterday in Tokyo, declined to comment whether the company is considering a plant from Renesas.

Japan’s microchip industry has struggled amid a strong yen and fierce competition, especially from South Korean and Taiwanese rivals, while manufacturers were also hit by last year’s quake and tsunami disaster.